Sample by My Essay Writer
By completing a product mix pricing strategy, the company is able to earn more money off of other products that it is selling. This will prevent the firm from having to increase the price on the product that it is currently selling, and focus instead on ensuring that it can make up for the extra costs by introducing items that carry a higher price to the public.
In order to achieve this, external factors need to play out. Mainly, there needs to be enough people who are able to afford the more expensive items. This will be determined by several factors. The neighbourhood in which the business operates is very important because the bakery needs to ensure there are enough people to afford the items that are at the higher price target. Furthermore, the new products that are being sold need to be desirable by enough people. This means there would need to be a considerable amount of research into finding new gluten-free foods that people would want to buy.
One of the strategies that can be used to create a demand for the highest-priced items is to give out free samples. Small test samples could be used to create a desire for the new products. If the new product is good, this could decrease the demand for the products that carry a lower profit margin, and increase the demand for the products that carry a higher profit margin.
2. New-product Pricing Strategy
The company should also consider a new-product pricing strategy. This will help to introduce new products to the customer base. The new-product pricing can begin very low to promote the product, but then the company could raise the price as people start coming to the bakery for their goods. By using this strategy, this could attract a larger clientele, and they will be after this new product. Once a large number of people have come to the bakery to try to new product under this cheap pricing strategy, they will become familiar with the bakery and be more likely to return. After the initial pricing strategy, after possibly a month, the price of that product can increase.
This strategy will depend on the amount of unpenetrated market segment. For example, if there are a lot of people who drive by the bakery but do not shop there, then there are many people who are potential new customers for the company to sell the new product to.
3. Cost-based Pricing
A third option is to use cost-based pricing. With this strategy, the company can focus on attracting a higher number of clients and selling a higher volume. This could decrease the price of the ingredients because more will be purchased. The company may need to incur additional expenses due to advertising costs. Other options to increase the customer base is to add catering to the company. If the company begins to cater its baked goods, that could increase the number of customers and the amount that the company is baking. This increase would demand additional ingredients, which could be purchased for less money due to the firm’s ability to buy in bulk.
This plan would depend on the bakery’s cash flow with which it could fund an advertising campaign for the catering. Also, it would depend on whether the wholesaler would lower the price if there is an increase to the amount of ingredients. It would also depend on whether there is a market for catered baked goods in the area.
